Asked by Kring Ronquillo on Apr 24, 2024
Verified
A convertible bond is a bond that can be:
A) Exchanged for cash at prescribed points in time.
B) Exchanged for a stated number of shares of common stock of the bond issuer.
C) Modified from a fixed coupon bond into a floating coupon bond at prescribed points in time.
D) Submitted to the issuer for redemption at the discretion of the bondholder.
E) Submitted for payment any time the economy converts into a recessionary period.
Convertible Bond
This is a bond that provides the holder the ability to convert it into a set number of shares of the issuer's stock at agreed-upon times over the bond's term, often by the choice of the investor.
Common Stock
A type of equity security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends.
- Recognize the significance of call, sinking fund, and convertible features in bonds.
Verified Answer
CM
Carin Melek8 days ago
Final Answer :
B
Explanation :
Convertible bonds are unique financial instruments that allow the bondholder to convert the bond into a predetermined number of shares of common stock of the issuing company, typically at certain times during the bond's life.
Learning Objectives
- Recognize the significance of call, sinking fund, and convertible features in bonds.